UNDERSTANDING THEIMPACT OF FAIRTRADEIDS Business and Development seminar13 November 2012Sally Smith, Independent Research Consultantsallyesmith@yahoo.com
What is Fairtrade? “Fairtrade is an alternative approach to conventional trade and is based on a partnership between producers and consumers. Fairtrade offers producers a better deal and improved terms of trade. This allows them the opportunity to improve their lives and plan for their future. Fairtrade offers consumers a powerful way to reduce poverty through their every day shopping.” Fairtrade International website
How does Fairtrade work? Set of standards which establish the „rules‟ for fair trading practices and engagement in Fairtrade, and 3rd party verification of compliance Standards for supply chain businesses trading in Fairtrade- labelled products (incl. min. price & Premium) Standards for Small Producer Organisations and Employers and Workers (e.g. democratic organisation, accountability, respect for labour rights & environment) Strategies which enable engagement in Fairtrade Building markets Technical and financial support for producers/workers Networks and alliances Facilitating civil society action around trade justice
Why is it important to measure impact inFairtrade? Learning & Accountability Improvement to producers &workers Internally in Fairtrade: Are aims & objectives to consumers being achieved? to businesses which invest In what situations do positive/negative impacts to funders occur? How can Fairtrade be improved? Externally with the development community How to maximise the impact of sustainability standards and trade-for-aid in development?
What are the challenges of measuringimpact? Scale & diversity of Fairtrade producers 905 certified producer organisations > 1.1 million farmers and workers 63 countries 17 product categories Source: Fairtrade International Monitoring Report 2011
What are the challenges of measuringimpact? Capturing the range of impacts Regional/ Economic impacts, e.g. National Income levels & stability development Access to finance Asset ownership Communities Social impacts, e.g. Producer / Self-confidence, self- Worker esteem Organisations Health, education Gender equality Producers/ Workers & Environmental Households impacts, e.g. Biodiversity Natural resource capacity
What are the challenges of measuring impact? Establishing the role of Fairtrade in bringing about change Understanding how and why change has occurred Ensuring reliable and credible findings, at reasonableBefore cost – Aftercomparison with controlgroup Source: http://impact.zewo.ch/en/impact
What are the challenges of measuringimpact? Maximising utility for producers and workers Committing to transparency and improvement Internal & external Learning communicati cycle on
Example of challenges in practice Center for Evaluation (CEval), Saarland University, commissioned to assess the impact of Fairtrade in rigorous way As baseline data were not available and a longitudinal study was not possible, CEval used a quasi-experimental design: comparing Treatment Groups (TGs) with matched Control Groups (CGs) at a single point in time (i.e. differences attributed to Fairtrade) TGs = 6 FT producer organisations, covering 6 sectors and 4 countries Was not possible to find CGs which matched TGs on all criteria (e.g. same type of organisation, levels of support, markets); access to non- Fairtrade producers challenging, especially plantations Matching needs to be done at level of villages (e.g. type of infrastructure) and individuals (e.g. amount of land) as well as organisations – resource intensive Data/results from different sectors/countries could not always be compared as contextual factors which determined results differed
Using the mass of evidence to understandFairtrade impact Nelson, V. and Pound, B. (2008) Fairtrade impact Meta- assessment: A literature review. NRI, University ofanalyse Greenwich: Chatham Meta-analysis of 38 studies s Vagneron, I. And Roquigny, S. (2010) What do we really know about the impact of Fairtrade? A Synthesis. PFCE: Paris Meta-analysis of 77 studies Sector Smith, S. (2010) Fairtrade bananas: A globalstudies assessment of impact. IDS: Sussex Sector study across 4 countries Nelson, V. and Smith, S. (2011) Fairtrade cotton: Assessing impact in Mali, Senegal, Cameroon and India. NRI: ChathamGender Sector study across 4 countries review Smith, S. (2011). Review of the literature on Gender and Fairtrade. Commissioned by Fairtrade
What do we know about Fairtrade impact for SmallProducers? Fairtrade can bring higher incomes and/or greater income security Impact on income depends on: prevailing market prices vs. Fairtrade minimum price; scale of production and sales on Fairtrade markets; financial situation of producer organisation Farmers with low volumes, or who don‟t sell much on Fairtrade markets, unlikely to escape poverty through Fairtrade alone Farmers with higher volumes/sales more able to save and invest – Fairtrade supports sustainable development Fairtrade can improve productivity and quality through market requirements, price incentives and Premium investments
In Mali, Senegal and Cameroon, Fairtrade increased the pricesfarmers received for cotton by between 22% and 70% from 2004-2007. However, this effect was stalled in 2008-2009 when marketgrowth did not keep up with supply.
What do we know about Fairtrade impact for SmallProducers? Fairtrade can help strengthen Small Producer Organisations (SPOs) in various ways: Greater access to working and investment capital, & high value markets Stronger, more resilient businesses – essential for impacts to be scaled up and sustained More democratic, transparent and inclusive organisations – essential for ensuring Fairtrade benefits reach producers (and empowerment) Scale and scope of impact depends on context, including market structures and trading relationships Support (organisational, technical, financial) from NGOs, buyers and/ or Fairtrade organisations is critical to outcomes
“[Fairtrade buyer] Twin is very historical in the establishment ofGumutindo... Without Twin the conversion to Fairtrade and qualitywould have been difficult... When we made a loss and thought wewould go out of business, Twin rescued us with a loan of$100,000.” Nimrod Wambette, Chair of Gumutindo Coffee Cooperative, Uganda
Use of the Fairtrade Premium by Small ProducerOrganisations• Average Fairtrade Premium earned by SPOs in 2009-10: €80,000 (€47 per farmer)• Improving production & processing at farmer level: 30%• Investments in developing SPO business: 24%• Investments in education, health, c ommunity development: 14% Source: Fairtrade International Monitoring Report
What do we know about Fairtrade impact forworkers? Relatively few studies to date – cannot generalise In cases studied, Fairtrade standards and auditing have improved working conditions Formalisation of employment and access to legislated entitlements New/improved employment policies and practices (e.g. sexual harassment, health and safety, on-farm housing) Income may increase through access to national minimum wages and wage-related benefits, but wages often below „living wage‟ levels Workers Committees to promote and defend workers‟ interests – some achievements but limited by lack of knowledge, bargaining power and external linkages (to trade unions and other networks)
Use of the Fairtrade Premium by Workers• Average Fairtrade Premium earned by Hired Labour settings in 2009-10: €80,000 (€100 per worker)• Investments in education, health, c ommunity development: 61%• Direct support to workers: 22%• Premium greatly appreciated by workers but not always managed well; benefits may not be distributed Source: Fairtrade International Monitoring Report
“I was a casual worker and my dream was to come and workhere, because of the benefits workers receive, the differentway of working, provision of working equipment, andcompliance with the law.”
What do we know about Fairtrade genderimpacts? Fairtrade can bring economic opportunities for women producers, increased involvement in SPOs, benefits from Premium use material and strategic gains Women workers often still in lower paid, less skilled employment, but Fairtrade may formalise work and lead to gender- sensitive employment practices Typically Fairtrade raises awareness of gender issues and rights but limited impact on gender roles and responsibilities within households, organisations, communities – not challenging power structures and entrenched inequalities Fairtrade gender impacts mediated via organisations – level of gender awareness in producer and worker organisations greatly
In Mali, Senegal and Cameroon, Fairtrade has enabled women to bepaid directly for their cotton for the first time. For some women this hasgiven them greater influence within their households, but others reportthat men still control all household income and take decisions
How and why does Fairtrade bring aboutchange? ESTABLISHIN ENABLING G RULES ENGAGEMEN FOR T IN FAIRTRADE FAIRTRADE MONITORING, EVALUATION & SETTING PROVIDING FORMING STANDARDS SUPPORT NETWORKS & • Business & LEARNING ALLIANCES Development • Production ADVOCACY & SUPPORT • Trade FOR CIVIL BUILDING SOCIETY VERIFYING MARKETS ACTION STANDARDS
What is being done to better monitor andlearn about Fairtrade impacts in future? Fairtrade International is developing a global impact assessment system based around a theory of change agreed by stakeholders Theory of change will help establish key areas of change that Fairtrade needs to track System will involve a range of research activities at different scales to meet information needs in a cost-effective way (e.g. ongoing M&E at a global level; limited number of longitudinal studies started each year; occasional thematic research, etc.) Key to success = effective systems for, and commitment to, learning
“Change is the end result of all true learning.” Leo Buscaglia
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